May 9, 2018 / 9:42 PM / 14 days ago

EMERGING MARKETS-Argentina stocks jump as gov't seeks IMF financing

 (Updates prices)
    SAO PAULO, May 9 (Reuters) - Argentina's MerVal stocks index
 shot higher on Wednesday, just a day after the
government said it had initiated financing talks with the
International Monetary Fund that are likely to "take weeks."
    After a volatile period for Argentina's peso
currency and the MerVal on Tuesday, President Mauricio Macri
announced Latin America's third largest economy would seek a
financing deal with the IMF to stabilize the economy.

    A weakening peso had spurred the central bank to the raise
the benchmark interest rate some 1,275 basis points since April
27. The MerVal had fallen some 12 percent over the last 12
sessions.
    On Wednesday, Argentina's Cabinet chief, Marcos Pena, said
that financing negotiations with the IMF would take "weeks," and
he urged Argentines not to be afraid of the fund.
    Shortly afterwards, the Treasury Ministry said Argentina
will request a "stand-by" financing arrangement with the IMF,
with negotiations likely to take up to six weeks.
    Market participants viewed a potential IMF deal as positive,
while warning that the move is unusual given that the fund
usually makes such deals with less economically frenetic
countries.
    "In general, flexible credit lines have been given to
countries with a solid track record when its comes to inflation
and fiscal accounts," said Jorge Mariscal, emerging markets
chief investment officer at UBS Global Wealth Management. 
    "If Argentina gets any help from the IMF, it would increase
the odds of successfully navigating the current turbulence and
allow the Macri administration to deepen the reform process."
    Argentina's Merval rose about 6 percent on Wednesday, while
the peso closed down just under 0.5 percent. 
    Mexico's IPC equities index fell 0.91 percent as
traders said spirits were subdued by reports the United States
had rejected Mexico's latest auto sector proposal during North
American Free Trade Agreement negotiations.
    In currency markets, Brazil's real weakened 0.74
percent after central bank President Ilan Goldfajn gave a dovish
speech that boosted bets on a Selic rate cut next week.
    "With the speech of the central bank president, bets on a
new 25-basis-point cut to the Selic rate should gain steam,"
brokerage Renascença Corretora wrote in a note to clients.
    
Key Latin American stock indexes and currencies at 2111 GMT:
    
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets         1143.85       0.1     -1.36
                                                  
 MSCI LatAm                    2821.22      0.84     -1.08
                                                  
 Brazil Bovespa               84435.22      1.78     10.51
                                                  
 Mexico IPC                   46360.71     -0.77     -6.07
                                                  
 Chile IPSA                    5664.20      0.34      1.79
                                                  
 Chile IGPA                   28569.87      0.44      2.11
                                                  
 Argentina MerVal             27768.66      5.68     -7.64
                                                  
 Colombia IGBC                12444.94      0.97      9.45
                                                  
 Venezuela IBC                17737.73      1.07    -44.05
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    3.5940     -0.74     -7.81
                                                  
 Mexico peso                   19.5850     -0.05      0.58
                                                  
 Chile peso                     633.31      0.09     -2.95
                                                  
 Colombia peso                    2863      0.26      4.16
 Peru sol                        3.295     -0.21     -1.76
                                                  
 Argentina peso                22.6800     -0.35    -17.99
 (interbank)                                      
                                                  
 Argentina peso                  23.05     -1.52    -16.57
 (parallel)                                       
                                                  
 
    

 (Reporting by Gram Slattery; additional reporting by Rodrigo
Campos in New York and Miguel Angel Gutiérrez in Mexico City;
Editing by Lisa Shumaker)
  
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